Day Traders Diary


The major averages capped a strong week with a rally that sent the S&P 500 higher by 0.7%. The benchmark index gained 4.1% for the week while the Nasdaq Composite (+0.7%) extended its weekly advance to 5.3%.

Equity indices endured a shaky start with a handful of concerns factoring into the cautious posture in the early going:
Contagion concerns stemming from news that a New York doctor who exhibited Ebola-like symptoms yesterday tested positive for the disease
Disappointing economic data from China that revealed a 1.3% year-over-year drop in New Home Sales and featured monthly declines in all 70 cities, and
Below-consensus results from (AMZN 287.06, -26.12)
After spinning their wheels through the opening hour, the key indices were able to pull away from their flat lines with help from influential sectors. In addition, investor sentiment was boosted by news from the National Institute of Health indicating Dallas Presbyterian nurse Nina Pham has recovered from Ebola.

Coincidentally, the health care sector (+1.4%) settled in the lead with significant support from Bristol-Myers (BMY 53.63, +1.13) and Shire (SHPG 194.49, +9.51). The two names posted respective gains of 2.2% and 5.1% in reaction to upbeat quarterly results while the iShares Nasdaq Biotechnology ETF (IBB 288.77, +5.15) jumped 1.8%.

Similar to health care, the remaining three countercyclical sectors ended ahead of the broader market with gains between 0.8% and 1.0%.

Meanwhile, the cyclical groups ended in mixed fashion with respect to the S&P 500. Financials (+0.9%) and industrials (+0.9%) outperformed, while consumer discretionary (-0.1%) and energy (-0.3%) lagged.

The consumer discretionary sector was pressured by an 8.3% loss in the shares of while also enduring weakness among carmakers. Ford (F 13.78, -0.62) lost 4.3% after surpassing bottom-line estimates on below-consensus revenue. On the flip side, media names and restaurant stocks displayed relative strength.

For its part, the energy sector stumbled in the morning amid weakness in crude oil. The energy component climbed off its worst level of the day, but still ended lower by 1.2% at $81.03/bbl.

Also of note, the technology sector (+0.8%) traded in-line with the market for the bulk of the session before joining the leaders in the afternoon. Dow component Microsoft (MSFT 46.13, +1.11) advanced 2.5% after beating earnings and revenue estimates while chipmakers drew strength from KLA-Tencor (KLAC 75.90, +4.90). The stock soared 6.9% in reaction to in-line results, combined with a special dividend of $16.50 and an increased buyback program. The broader PHLX Semiconductor Index rose 1.1%.

Treasuries ended flat after sliding from their overnight highs. The 10-yr yield ended at 2.27%.

Participation was roughly in-line with long-term averages as 700 million shares changed hands at the NYSE floor.

Economic data was limited to the New Home Sales report for September, which revealed a 0.2% increase to 467,000 from a revised rate of 466,000 (from 504,000). However, that was below the consensus, which expected a reading of 475,000. Most notably, the large downward revision to the August figures took away what had been the strongest monthly reading since May 2008.
Prices for new homes fell 4.0% year-over-year, which was the first such decline since April and the largest drop since a 7.7% tumble in January 2012.
Monday's data will be limited to the 10:00 ET release of the Pending Home Sales report for September ( consensus 0.5%).
Nasdaq Composite +7.4% YTD
S&P 500 +6.3% YTD
Dow Jones Industrial Average +1.4% YTD
Russell 2000 -3.8% YTD

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